14.	Commitments and Contingencies

Leases

The Company leases office and warehouse space, machinery and other equipment under noncancellable operating lease agreements which expire at various dates through 2030. These leases generally contain scheduled rent increases or escalation clauses, renewal options, or in some cases, purchase options. The Company also leases certain warehouse space and other equipment under capital lease agreements which expire at various dates through 2030. These leases contain scheduled rent increases or escalation clauses. Amortization of assets recorded under capital leases is included in depreciation expense.

Rental expense incurred for noncancellable operating leases was $13.6 million in 2016, $8.9 million in 2015 and $7.6 million in 2014. See Note 6 and Note 19 to the consolidated financial statements for additional information on leased property under capital leases.

The following is a summary of future minimum lease payments, including renewal options the Company has determined to be reasonably assured, for all noncancellable operating leases and capital leases as of January 1, 2017:

(in thousands)	Capital Leases		Operating Leases		Total
2017	$	10,495	$	11,141	$	21,636
2018		10,421		9,211		19,632
2019		10,149		8,371		18,520
2020		10,328		8,432		18,760
2021		5,933		8,074		14,007
Thereafter		12,081		32,805		44,886
Total minimum lease payments including interest	$	59,407	$	78,034	$	137,441
Less: Amounts representing interest		10,686
Present value of minimum lease principal payments		48,721
Less: Current portion of principal payment obligations under capital leases		7,527
Long-term portion of principal payment obligations under capital leases	$	41,194

Manufacturing Cooperatives

The Company is a shareholder of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative in Bishopville, South Carolina from which it is obligated to purchase 17.5 million cases of finished product on an annual basis through June 2024. All eight shareholders of the cooperative are Coca‑Cola bottlers and each has equal voting rights. The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement. The Company purchased 29.9 million cases, 28.3 million cases and 25.9 million cases of finished product from SAC in 2016, 2015 and 2014, respectively.

The Company is also a shareholder of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which it is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories.

The Company has an equity ownership in both SAC and Southeastern. Following is a summary of purchases from these manufacturing cooperatives:

	Fiscal Year
(in thousands)	2016		2015		2014
Purchases from SAC	$	149,878	$	144,511	$	132,635
Purchases from Southeastern		80,123		63,257		67,966
Total purchases from manufacturing cooperatives	$	230,001	$	207,768	$	200,601

The Company guarantees a portion of SAC’s and Southeastern’s debt, which resulted primarily from the purchase of production equipment and facilities and expires at various dates through 2023. The amounts guaranteed were as follows:

(in thousands)	January 1, 2017		January 3, 2016
Guaranteed portion of debt - SAC	$	23,297	$	19,057
Guaranteed portion of debt - Southeastern		9,277		11,467
Total guaranteed portion of debt - manufacturing cooperatives	$	32,574	$	30,524

In the event either of these cooperatives fails to fulfill its commitments under the related debt, the Company would be responsible for payments to the lenders up to the level of the guarantees. The following table summarizes the Company’s maximum exposure under these guarantees if these cooperatives had borrowed up to their aggregate borrowing capacity:

	January 1, 2017
(in thousands)	South Atlantic Canners, Inc.		Southeastern Container		Total Manufacturing Cooperatives
Maximum guaranteed debt	$	23,938	$	25,251	$	49,189
Equity investments*		4,102		17,501		21,603
Maximum total exposure, including equity investments	$	28,040	$	42,752	$	70,792

*	NOTE: Recorded in other assets on the Company’s consolidated balance sheets using the equity method.

The members of both cooperatives consist solely of Coca‑Cola bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill its commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of its products to adequately mitigate the risk of material loss from the Company’s guarantees. Following is a summary of the cooperatives’ 2016 financial results:

(in thousands)	South Atlantic Canners, Inc.		Southeastern Container
Total assets	$	53,417	$	279,830
Total debt		23,109		111,202
Total revenues		204,144		527,609

The Company holds no assets as collateral against the SAC or Southeastern guarantees, the fair value of which is immaterial to the Company’s consolidated financial statements. The Company monitors its investments in SAC and Southeastern and would be required to write down its investment if an impairment was identified and the Company determined it to be other than temporary. No impairment of the Company’s investments in SAC or Southeastern has been identified as of January 1, 2017, and there was no impairment in 2016, 2015 or 2014.

Other Commitments and Contingencies

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. These letters of credit totaled $29.7 million on January 1, 2017 and $26.9 million on January 3, 2016.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. The future payments related to these contractual arrangements as of January 1, 2017 amounted to $81.7 million and expire at various dates through 2026.

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, cash flows or results of operations of the Company. No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

The Company is subject to audits by tax authorities in jurisdictions where it conducts business. These audits may result in assessments that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for any assessments likely to result from these audits; however, final assessments, if any, could be different than the amounts recorded in the consolidated financial statements.